How to Donate Directly From an IRA to Charity

Donating directly from an Individual Retirement Arrangement (IRA) to a charity, known as a Qualified Charitable Distribution (QCD), is a tax-savvy method of giving. This strategy allows for a direct, tax-free transfer of funds from an IRA to an eligible charitable organization. A QCD can help you support causes you care about while managing your taxable income.

Eligibility for a Qualified Charitable Distribution

To execute a QCD, the donor, retirement account, and charitable recipient must all meet specific standards. The primary requirement for the donor is age; an individual must be at least 70½ years old when the distribution is made. This age requirement is fixed, even though the age for Required Minimum Distributions (RMDs) has changed.

QCDs can be made from traditional IRAs, inherited IRAs for beneficiaries over age 70½, and inactive Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) IRAs. An inactive SEP or SIMPLE IRA is one where the employer has not made contributions for the plan year. Distributions from active SEP or SIMPLE IRAs and other workplace plans like 401(k)s are not eligible.

The receiving organization must be a qualified 501(c)(3) organization, which are public charities eligible to receive tax-deductible contributions. However, the rules explicitly exclude certain types of organizations. Donations cannot be directed to donor-advised funds (DAFs), private foundations, or supporting organizations.

Financial Rules and Tax Treatment

For 2025, an individual can transfer up to $108,000 per year to charity via a QCD. This annual limit is per person, so a married couple could each make a QCD of up to $108,000 from their respective IRAs. The maximum amount is indexed for inflation and may increase in future years.

The primary tax benefit is that the distributed amount is excluded from the donor’s adjusted gross income (AGI). A QCD provides this tax benefit regardless of whether you itemize or take the standard deduction. This exclusion from AGI can also reduce exposure to the Medicare high-income surcharge and lessen the taxable portion of Social Security benefits.

A QCD can also be used to satisfy an individual’s Required Minimum Distribution (RMD) for the year. An RMD is the amount that IRA owners must withdraw annually starting at age 73. Because a QCD counts toward the RMD but is not included in taxable income, it allows you to fulfill the mandatory withdrawal without increasing your tax liability.

The Process of Making a Direct Transfer

To make a QCD, you must coordinate directly with your IRA custodian. Contact the financial institution holding your IRA to begin their process, which may require a distribution form. You will need to provide the charity’s full legal name, address, and tax identification number.

There are two methods for transferring the funds. The most common is for the IRA custodian to send a check directly from your IRA to the charity, which is a requirement for the distribution to qualify. Alternatively, the custodian can issue a check payable to the charity and send it to you for delivery. The check must not be made payable to you, as this would be a taxable distribution. To ensure the transaction is completed within the tax year, initiate the process well before the December 31 deadline.

Reporting the Donation on Your Tax Return

You must properly report a QCD on your federal income tax return to receive its benefits. Early in the following year, your IRA custodian will send you Form 1099-R, which reports all distributions from your IRA. While this form may have a specific code for a QCD, you are responsible for correctly accounting for it on your tax return.

On your Form 1040, report the total distribution from Form 1099-R on the line for IRA distributions. On the line for the taxable amount, enter “0” if the entire distribution was a QCD. You should also write “QCD” next to this line to clarify the entry.

You must obtain a written acknowledgment from the charity for any QCD of $250 or more before filing your tax return. This receipt must state the donation amount and confirm that you did not receive any goods or services in exchange for the contribution. You should retain this acknowledgment with your tax records to substantiate the transaction.